Japanese household spending weak; US non-farm payrolls headline strong; Canada payrolls dip; German factory orders jump; Norway moves its gold to safety; global food prices rise; UST 10yr at 4.78%; gold and oil hold; NZ$1 = 58.8 USc; TWI-5 = 62.1

Here's our summary of key economic events over the weekend that affect New Zealand, with news we are heading into a week that will deliver a wide set of consumer and producer inflation reports.

But locally, the data releases will be light. It is a light data week in Australia too, with only migration updates this week. But we will also get an update on the total value of all houses as at June and that may start to show a leveling off from the March record high AU$12.8 tln. We will also get August consumer and business confidence updates from Australia, and September consumer inflation expectations results.

Globally we will be looking for signs of widening cracks in fuel markets as Trump's forever war drags on. In the US they are now on their long Labor Day weekend holiday, ending their summer holiday season. They face petrol prices +40% higher than when Trump started his Persian Gulf war with Iran. Diesel there are almost +80% higher now and that is having broad inflationary impacts in secondary goods costs. That these are rising faster recently is not a sign that Kevin Warsh will be able to ignore, even if he is under renewed pressure from the White House to do so.

So of special interest will be the US August CPI update, brought to you by the good folks at the same agency that delivered the strong headline labour market data on Friday (the agency Trump fired the head of a while ago because he didn't like the results they released). A 3.4% headline rate is anticipated, but markets are taking that sceptically. After all, the PCE inflation measure for July was 3.7%. Even if you take both at face value, and the payrolls data at face value, there seems little justification for them not to weigh against inflation at this time. But Warsh & the Fed probably won't, so American inflation is set to be outsized and rising for some time yet.

They will also release August PPI data this week, expected to remain elevated at 4.7%. The first September University of Michigan sentiment survey will drop this week too, and this has been very low reflecting unease over unconstrained inflation. And American consumer inflation expectations survey commissioned by the NY Fed will also drop this week.

Meanwhile, the ECB will decide on interest rates (expect a +25 bps rise to 2.5%), and Germany will unveil August industrial production data.

There will be more trade and inflation data out elsewhere and that includes from China. We expect a larger trade surplus and their low inflation to rise again, marginally.

From Japan, a raft of economic reports is due, including revised Q2 GDP, July wages and current account data, as well as August PPI, which is expected to show producer inflation accelerating to 7.4%. Their machine tool order update is due too.

Over the weekend, the Japanese household spending data that was weak in June got weaker for July, a result that wasn't expected. It was a contraction at the sharpest pace since January 2024. Only the furniture and recreation categories were positive.

The US non-farm payrolls was out over the weekend and rose much more than expected in both the headline version and the actual version, up +154,000 in August from July when just a +15,000 rise was expected, up +456,000 from a year ago to 158.9 mln people on payrolls. This result is sharply different to the ADP Employment report which tracks most of this weekly.

The broader employed civilian labour force data however isn't so upbeat, showing a -133,000 fall from July, down -621,000 from August a year ago and to 162.7 mln employed people. Take your pick from these two official results, but it does suggest a widening gap where it is substantially harder to sustain employment unless you are on a company payroll.

Markets seem sceptical of the strong headline jobs report, suspecting it is something that will be corrected in future. Wall Street is lower, benchmark bond yields are higher, both shifts you may not expect if they did believe the headline data was genuine.

Across the border, Canada reported a tougher labour market. Employment there declined by -41,700 in August, missing expectations for a +15,000 increase and following a +75,100 gain in July.

In the overall EU, retail sales volume growth slowed to just +1.0% in July from a year ago, from an upwardly revised +1.7% in June. This was slightly lower than market expectations of a +1.1% gain and was the smallest increase in retail trade since April. But at least they have positive volume growth.

In Germany they reported a sharp rise in factory orders in July, up +2.5% from June to be more than +13% higher than year-ago levels. This was much better than observers were expecting.

In Norway, their gigantic US$2 tln sovereign wealth fund is moving to sharply cut back on its exposure to US Treasury bonds. Yesterday we noted the Dutch move to insulate risks by moving their gold holdings out of the US.

Global food prices rose notably in August to their highest since November 2022. All food groups rose including for meat and dairy, although the biggest rises were for cereals, sugar, and vegetable oils.

Also globally, perhaps we should note that the value of the top 50 mining companies surged on stock exchanges by a monster +US$350 bln in August alone, taking them back to February levels when the value of gold was US$1000 higher than it is now.

The UST 10yr yield is now just on 4.78%, unchanged from Saturday at this time, up +5 bps for the week. The 30 year yield is still at 5.25%, up +3 bps for the week. The key 2-10 yield curve is now at +41 bps (up +1 bp). Their 1-5 curve is now at +42 bps (+1 bp) and the 3 mth-10yr curve is at +107 bps (+1 bp). The China 10 year bond rate is holding at 1.68%. The Japanese 10 year bond yield is now at 2.91%, unchanged. The Australian 10 year bond yield starts today at 5.15%, down -4 bps, but up +6 bps for the week. The NZ Government 10 year bond rate is now at 4.82%, unchanged from Saturday, up +5 bps for the week.

The price of gold is now at US$4433/oz, and up +US$9 from Saturday at this time, down -US$29 from a week ago. Silver is little-changed at just on US$66/oz, down -50 USc for the week.

Oil prices are holding at just on US$91.50/bbl in the US, while the international Brent price is just under US$96.50/bbl and also little-changed. A week ago these prices were US$83.50 and US$88/bbl respectively. Hormuz transits have basically stopped with just one ship exiting over the past 24 hours, and not a tanker (0 dark with transponders off) and only two entering for new loads (1 dark). The Red Sea activity is marginally higher than Saturday with just over 20 each way at the Yemen chokepoint.

The Kiwi dollar is little-changed from Saturday at just on 58.8 USc but down -30 bps from a week ago. Against the Aussie we are still at 81.6 AUc. Against the euro we are down -10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 62.1, unchanged from Saturday, down -50 bps for the week.

The bitcoin price starts today at US$79,745 up +0.2% from Saturday at this time, but up +2.7% from last week at this time. Volatility over the past 24 hours has been very low at just under +/-0.4%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».